Sonoco Reports Fourth-Quarter and Full-Year 2021 Results
Sonoco (NYSE: SON) announced its fourth-quarter and full-year 2021 results, reporting net sales of $1.44 billion for Q4 and $5.59 billion for the full year, marking increases from 2020. Despite a GAAP loss of $(0.86) per diluted share for 2021, Q4 earnings improved significantly to $0.66 per share. The company's acquisition of Ball Metalpack for $1.35 billion is expected to positively impact 2022 earnings, with guidance set between $4.60 and $4.80 per diluted share. Operational cash flow is projected between $690 million to $740 million for 2022.
- Fourth-quarter net sales increased to $1.44 billion, a 4.6% rise from 2020.
- Acquisition of Ball Metalpack expected to enhance earnings in 2022.
- 2022 guidance set between $4.60 and $4.80 per diluted share, reflecting the acquisition's benefit.
- Fourth-quarter base earnings rose to $0.90 per diluted share, up from $0.82 in 2020.
- Operating cash flow for 2022 projected between $690 million and $740 million.
- Full-year 2021 GAAP loss per diluted share was $(0.86), down from earnings of $2.05 in 2020.
- Full-year cash flow from operations decreased to $298.7 million, down from $705.6 million in 2020.
- Gross profit as a percentage of sales dropped to 19.0% in 2021 from 20.0% in 2020.
Company Raises 2022 Guidance to Reflect Benefit of Ball Metalpack Acquisition
HARTSVILLE, S.C., Feb. 10, 2022 (GLOBE NEWSWIRE) -- Sonoco (NYSE: SON), one of the largest sustainable global packaging companies, today reported financial results for its fourth quarter and full year, both ending December 31, 2021.
Fourth-Quarter and Full-Year Highlights
- Fourth-quarter 2021 net sales were
$1.44 billion , up from$1.38 billion in 2020. Full-year 2021 net sales were$5.59 billion , compared to$5.24 billion in 2020. - Fourth-quarter 2021 GAAP earnings per diluted share was
$0.66 , compared with a GAAP loss per diluted share of$(0.12) in 2020. The full-year 2021 GAAP loss per diluted share was$(0.86) , compared to GAAP earnings per diluted share of$2.05 in 2020. The full-year 2021 GAAP loss was driven by$410.4 million after-tax pension settlement charges mostly related to the Company's settlement of its U.S. Inactive Plan in the second quarter. - 2021 fourth-quarter results include net after-tax charges of
$0.24 per diluted share related to restructuring charges, acquisition-related activity, non-operating pension costs, and other non-base items. Prior-year results included net after-tax charges of$0.56 per diluted share primarily related to non-cash asset impairments,$0.17 per diluted share from the loss on the divestiture of the Company's European contract packaging business and charges from restructuring, non-operating pension and acquisition/divestiture costs. - Base net income attributable to Sonoco (base earnings) for the quarter was
$0.90 per diluted share, compared with$0.82 in 2020. Full-year 2021 base earnings per diluted share were$3.55 , compared to$3.41 in 2020. (See base earnings definition, explanation and reconciliation to GAAP earnings later in this release.) Sonoco previously provided fourth-quarter and full-year 2021 base earnings guidance of$0.84 t o$0.90 and$3.49 t o$3.55 per diluted share, respectively. - Full-year cash flow from operations was
$298.7 million in 2021, compared with$705.6 million in 2020. Free cash flow in 2021 was$55.8 million , compared with$524.5 million in 2020. (See free cash flow definition and reconciliation to cash flow from operations later in this release.) - On January 26, 2022, Sonoco completed the acquisition of Ball Metalpack, a leading manufacturer of sustainable steel tinplate packaging for food and household products and the largest aerosol can producer in North America, for
$1.35 billion in cash subject to customary adjustments, including for working capital, cash, and indebtedness.
Full-Year and First Quarter 2022 Guidance Updates
- Full-year 2022 base earnings are expected to be in the range of
$4.60 t o$4.80 per diluted share, including the projected earnings benefit from the addition of Ball Metalpack. Effective with the first quarter of 2022, the Company has modified its definition of base earnings to exclude amortization expense on acquisition intangibles. This change was made to better align the Company's definition of base earnings with those of its peers. Full-year 2021 base earnings per diluted share would have been$3.93 after adding back amortization expense on intangibles from acquisitions. - Base earnings for the first quarter of 2022 are estimated to be in the range of
$1.25 t o$1.35 per diluted share. Base earnings per diluted share for the first quarter of 2021 would have been$1.00 after adding back amortization expense on acquisition intangibles. - Full-year 2022 cash flow from operations and free cash flow are expected to be between
$690 million to$740 million and$365 million to$415 million , respectively. This updated guidance reflects the expected benefit from the Ball Metalpack acquisition.
Note: First-quarter and full-year 2022 GAAP guidance are not provided in this release due to the likely occurrence of one or more of the following, the timing and magnitude of which we are unable to reliably forecast: gains or losses on the sale of businesses or other assets, restructuring actions, asset impairment charges, acquisition/divestiture costs, certain income tax related events and other items. These items could have a significant impact on the Company's future GAAP financial results.
CEO Comments
Commenting on the Company’s full-year and fourth-quarter results, Sonoco President and Chief Executive Officer Howard Coker said, "As I look back at all we accomplished in 2021, I couldn't be more proud of how our Sonoco team worked together to produce solid results despite unprecedented headwinds from storms, supply chain disruptions, inflation and the continuing effects of Covid-19. We aggressively drove price increases across all our businesses to counter higher raw material and non-material inflation. We increased capital spending to fund more high-return projects, including Project Horizon which is modernizing our Hartsville uncoated recycled paperboard complex. We better focused our sustainability efforts, including setting aggressive science-based targets to meaningfully reduce greenhouse gas emissions over the next decade. We simplified our portfolio by exiting the display and packaging business and recently added Ball Metalpack, which further expands our sustainable consumer packaging offering while being immediately accretive to base earnings and cash flow. Finally, we returned a record
"In the fourth quarter, our balanced mix of Consumer and Industrial packaging businesses performed well as we achieved results at the high end of our base earnings guidance despite facing market disruptions and continued cost pressures. Overall, our bottom-line results benefited from strong productivity, an overall positive price/cost relationship, and a lower effective tax rate. These positive factors were partially offset by the impact of four fewer shipping days compared to last year's fourth quarter and the divestiture of the display and packaging business. Our Industrial Paper Packaging segment achieved a sixth consecutive quarter of sales growth while operating profit increased by almost 33 percent as demand and price realization continued to improve. Our Consumer Packaging segment operating profit declined 14 percent from the prior-year quarter reflecting a normalization of demand from the heightened eat-at-home trends experienced last year and the impact of higher costs. Finally, our All Other group of businesses, which includes industrial plastics, protective and retail security packaging, and health care packaging, reported a 34.5 percent decline in operating profit primarily stemming from the display and packaging divestiture."
Fourth-Quarter Review
Net sales for the fourth quarter were
GAAP net income attributable to Sonoco in the fourth quarter was
Fourth-quarter GAAP results include after-tax charges of
Gross profits were
Segment Review
Sonoco reports its financial results in two segments: Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other. Segment operating results do not include restructuring and asset impairment charges, acquisition/divestiture costs, interest income and expense, income taxes or certain other items, if any, the exclusion of which the Company believes improves comparability and analysis. Note that in all instances prior-period results have been recast to conform to current-year presentation.
Consumer Packaging
Sonoco’s Consumer Packaging segment primarily serves prepared and fresh food markets along with other packaging for direct-to-consumer products and includes the following products and services: round and shaped rigid paper containers; metal and peelable membrane ends and closures; thermoformed plastic trays and containers; printed flexible packaging; and global brand artwork management.
Fourth-quarter 2021 sales for the segment were
Fourth-quarter 2021 segment sales increased 3.3 percent compared to the prior-year's quarter driven by higher selling prices implemented to help offset inflation, partially offset by fewer shipping days in the quarter. Adjusted for the impact of fewer days, "same-day" volume/mix was modestly favorable in the segment.
Volume/mix in our Flexible Packaging and Plastics - Food businesses increased from 2020 due to recovery from the pandemic, despite the decrease in days. These gains were mostly offset by volume/mix losses in our Global Rigid Paper Containers business which experienced a return to more normal sales levels after the prior year benefited from consumers' at-home eating preferences driven by pandemic-related lockdowns and other restrictions.
Segment operating profit decreased 14.2 percent compared to the prior-year quarter as strong productivity gains were more than offset by a negative price/cost relationship stemming from rising cost inflation along with the impact of fewer shipping days year over year. Overall, segment operating margin decreased by 196 basis points to 9.6 percent.
Industrial Paper Packaging
The Industrial Paper Packaging segment includes the following products: fiber-based tubes, cones, and cores; fiber-based construction tubes; fiber-based protective packaging and components; wooden, metal and composite wire and cable reels and spools; and recycled paperboard, corrugating medium, recovered paper and material recycling services.
Fourth-quarter 2021 sales for this segment were
Sales increased 20.5 percent compared to the prior year’s quarter mostly due to higher selling prices implemented to offset inflation which were partially offset by the impact of fewer shipping days. On a same-day basis, volume/mix was slightly positive as global tube, core and cone demand continued to improve but was mostly offset by declines in our paper and recycling businesses.
Segment operating profit increased
All Other
Businesses grouped as All Other include healthcare packaging, protective and retail security packaging and industrial plastic products. These businesses include the following products and services: thermoformed rigid plastic trays and devices; custom-engineered molded foam protective packaging and components; temperature-assured packaging; injection molded and extruded containers, spools and parts; retail security packaging, including printed backer cards, thermoformed blisters and heat-sealing equipment; and paper amenities.
Fourth-quarter 2021 sales for these businesses were
All Other sales declined 25.7 percent from the prior-year quarter driven by divestiture of display and packaging and fewer shipping days in the current-year quarter. These factors were partially offset by higher selling prices and improved demand, particularly in the temperature assured unit which achieved record sales driven by demand for COVID-19 vaccine shippers. Despite the current-year quarter having fewer days, overall volume/mix for All Other improved by 5.9 percent adjusted for the display and packaging divestiture.
All Other operating profit declined 34.5 percent from the prior year's quarter due primarily to the display and packaging divestiture along with a negative price/cost relationship as cost inflation exceeded price recovery. The group's operating margin declined 77 basis points to 5.8 percent.
Corporate/Tax
Net interest expense for the fourth quarter of 2021 decreased to
2021 Full-Year Results
2021 net sales were
The GAAP net loss attributable to Sonoco for 2021 was
Base earnings in 2021 increased 3.0 percent to
2021 Cash Flow and Free Cash Flow
For 2021, cash generated from operations was
Net capital expenditures were
Free cash flow for 2021 was
Sonoco continues to provide value to shareholders through quarterly dividends. The Company paid
As of December 31, 2021, total debt was
Full-Year 2022 and First Quarter Updated Outlook
Including the accretive impact of the Ball Metalpack acquisition, the Company expects 2022 base earnings to be in the range of
For its legacy business, the Company expects that on an annual basis volume/mix will improve by about 1 percent and that cost recovery initiatives put in place to offset inflation will result in a positive price/cost relationship. Offsetting these favorable factors are an expected negative year-over-year impact from foreign exchange rates, a higher effective tax rate, and increased selling, general and administrative expenses. Selling, general and administrative expenses are expected to increase due to the non-recurrence of Covid-related incentives received in 2021, wage inflation, and strategic information technology expenses.
Including Ball Metalpack, 2022 annual depreciation expense is expected to be
For comparison, the Company's full-year 2021 base earnings per diluted share would have been
Sonoco expects full-year 2022 operating cash flow and free cash flow to be in a range of
Although the Company believes the assumptions reflected in the range of guidance are reasonable, given uncertainty regarding the future performance of the overall economy, continued effects of the pandemic on global supply chains, and potential changes in raw material prices, other costs, and to the Company's effective tax rate, as well as other risks and uncertainties, including those described below, actual results could vary substantially.
Commenting on the Company’s outlook, Coker said, "We are extremely excited entering 2022 that our core Consumer and Industrial businesses are well positioned to achieve stronger performance coming out of the pandemic. Our efforts to recover higher costs continue to gain traction and we will remain diligent to stay ahead of the price/cost curve. We expect our 'invest in ourselves' strategy to continue delivering enhanced growth and improved productivity. We expect to further simplify our structure, creating a more effective and efficient organization, while managing the Company's portfolio for 'fit' around fewer, but larger, businesses. Finally, the complementary addition of Ball Metalpack fits our strategy by increasing the capability of our core can-making franchise and expanding our position in more-defensive consumer markets, while providing significant synergy, technology and process optimization opportunities.
"Our purpose is Better Packaging. Better Life. This means we are committed to creating sustainable packaging solutions that help build our customers' brands, enhance their product offerings and improve the quality of life for people around the world. We remain committed to returning cash to our shareholders and believe our value-creating strategy will make Sonoco Better than Ever."
Conference Call Webcast
Management will host a conference call and webcast to further discuss these results beginning at 11 a.m. ET today. The live conference call and a corresponding presentation can be accessed via the Internet at www.sonoco.com, under the Investor Relations section, or at http://investor.sonoco.com. A telephonic replay of the call will be available starting at 2 p.m. ET, to U.S. callers at 855-859-2056 and international callers at +404-537-3406. The replay passcode for both U.S. and international calls is 8575573. The archived call will be available through February 20, 2022. The webcast call also will be archived in the Investor Relations section of Sonoco’s website.
About Sonoco
Founded in 1899, Sonoco (NYSE: SON) is a global provider of consumer, industrial products, healthcare and protective packaging. With annualized net sales of approximately
Forward-looking Statements
Statements included herein that are not historical in nature, are intended to be, and are hereby identified as “forward-looking statements” for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended. In addition, the Company and its representatives may from time to time make other oral or written statements that are also “forward-looking statements.” Words such as “anticipate,” “aspires,” “assume,” “believe,” “can,” “commitment,” “consider,” “could,” “envision,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “intend,” “may,” “might,” “objective,” “opportunity,” “outlook,” “plan,” “potential,” “project,” “re-envision,” “strategy,” “target,” “will,” “would,” or the negative thereof, and similar expressions identify forward-looking statements.
Forward-looking statements in this communication include statements regarding, but not limited to: the Company’s future operating and financial performance, including Full-Year 2022 and First Quarter Updated Outlook; expected benefits from the Ball Metalpack acquisition and the strategic advantages and synergy, technology and process opportunities related thereto; the effects of the Company's 'invest in ourselves' strategy, including enhanced growth and improved productivity; the effects of ongoing and anticipated restructuring and portfolio management activities; efforts to recover higher costs and stay ahead of the price/cost curve; the effects of the COVID-19 coronavirus on the Company’s business, operations, people, supply chains and financial condition; goals relating to sustainability and reduction of greenhouse gas emissions; the return of cash to shareholders; and creation of long-term value and returns for shareholders.
Such forward-looking statements are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management. Such information includes, without limitation, discussions as to guidance and other estimates, perceived opportunities, expectations, beliefs, plans, strategies, goals and objectives concerning our future financial and operating performance. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed or forecasted in such forward-looking statements. The risks, uncertainties and assumptions include, without limitation, those related to: the Company’s ability to achieve the benefits it expects from acquisitions, including the Ball Metalpack acquisition; the Company’s ability to execute on its strategy, including with respect to acquisitions, cost management, restructuring and capital expenditures, and achieve the benefits it expects therefrom; the availability and pricing of raw materials, energy and transportation, including the impact of potential changes in tariffs and escalating trade wars, and the Company's ability to pass raw material, energy and transportation price increases and surcharges through to customers or otherwise manage these pricing risks; the effects of the COVID-19 pandemic on the Company’s results of operations, financial condition, value of assets, liquidity, prospects and growth, and on the industries in which it operates and that it serves; the costs of labor; the effects of inflation and fluctuations in consumer demand on the Company and the industries in which it operates and that it serves; the Company’s ability to meet its goals relating to sustainability and reduction of greenhouse gas emissions; the Company’s ability to return cash to shareholders and create long-term value; and the other risks, uncertainties and assumptions discussed in the Company’s filings with the Securities and Exchange Commission, including its most recent reports on Forms 10-K and 10-Q, particularly under the heading “Risk Factors.” The Company undertakes no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed herein might not occur.
References to our Website Address
References to our website address and domain names throughout this release are for informational purposes only, or to fulfill specific disclosure requirements of the Securities and Exchange Commission’s rules or the New York Stock Exchange Listing Standards. These references are not intended to, and do not, incorporate the contents of our website by reference into this release.
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | |||||||||||||||||
| (Dollars and shares in thousands except per share) | |||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||
| December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | ||||||||||||||
| Net sales | $ | 1,439,187 | $ | 1,376,348 | $ | 5,590,438 | $ | 5,237,443 | |||||||||
| Cost of sales | 1,175,562 | 1,101,592 | 4,528,528 | 4,191,104 | |||||||||||||
| Gross profit | 263,625 | 274,756 | 1,061,910 | 1,046,339 | |||||||||||||
| Selling, general and administrative expenses | 153,563 | 157,063 | 558,180 | 528,439 | |||||||||||||
| Restructuring/Asset impairment charges | 5,321 | 85,947 | 14,210 | 145,580 | |||||||||||||
| Loss on disposition of a business | — | 14,516 | 2,667 | 14,516 | |||||||||||||
| Operating Profit | 104,741 | 17,230 | 486,853 | 357,804 | |||||||||||||
| Non-operating pension costs | 5,598 | 7,510 | 568,416 | 30,142 | |||||||||||||
| Loss on early extinguishment of debt | — | — | 20,184 | — | |||||||||||||
| Net interest expense | 12,491 | 18,759 | 59,235 | 72,070 | |||||||||||||
| (Loss)/Income before income taxes | 86,652 | (9,039 | ) | (160,982 | ) | 255,592 | |||||||||||
| Provision/(Benefit) for income taxes | 24,112 | 3,693 | (67,430 | ) | 53,030 | ||||||||||||
| (Loss)/Income before equity in earnings of affiliates | 62,540 | (12,732 | ) | (93,552 | ) | 202,562 | |||||||||||
| Equity in earnings of affiliates, net of tax | 5,140 | 1,449 | 10,841 | 4,679 | |||||||||||||
| Net (loss)/income | 67,680 | (11,283 | ) | (82,711 | ) | 207,241 | |||||||||||
| Net (income)/loss attributable to noncontrolling interests | (2,523 | ) | (359 | ) | (2,766 | ) | 222 | ||||||||||
| Net (loss)/income attributable to Sonoco | $ | 65,157 | $ | (11,642 | ) | $ | (85,477 | ) | $ | 207,463 | |||||||
| Weighted average common shares outstanding – diluted | 98,743 | 100,948 | 99,608 | 101,209 | |||||||||||||
| Diluted earnings per common share | $ | 0.66 | $ | (0.12 | ) | $ | (0.86 | ) | $ | 2.05 | |||||||
| Dividends per common share | $ | 0.45 | $ | 0.43 | $ | 1.80 | $ | 1.72 | |||||||||
| FINANCIAL SEGMENT INFORMATION (Unaudited) | |||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||
| December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | ||||||||||||||
| Net sales | |||||||||||||||||
| Consumer Packaging | $ | 588,822 | $ | 569,915 | $ | 2,368,347 | $ | 2,229,859 | |||||||||
| Industrial Paper Packaging | 655,153 | 543,590 | 2,464,312 | 1,991,474 | |||||||||||||
| All Other | 195,212 | 262,843 | 757,779 | 1,016,110 | |||||||||||||
| Consolidated | $ | 1,439,187 | $ | 1,376,348 | $ | 5,590,438 | $ | 5,237,443 | |||||||||
| Segment operating profit: | |||||||||||||||||
| Consumer Packaging | $ | 56,484 | $ | 65,862 | $ | 252,824 | $ | 278,444 | |||||||||
| Industrial Paper Packaging | 56,930 | 42,945 | 218,346 | 176,809 | |||||||||||||
| All Other | 11,244 | 17,173 | 44,195 | 71,736 | |||||||||||||
| Restructuring/Asset impairment (charges) | (5,321 | ) | (85,947 | ) | (14,210 | ) | (145,580 | ) | |||||||||
| Other non-base income/(charges), net | (14,596 | ) | (22,803 | ) | (14,302 | ) | (23,605 | ) | |||||||||
| Consolidated | $ | 104,741 | $ | 17,230 | $ | 486,853 | $ | 357,804 | |||||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) | ||||||||||
| (Dollars in thousands) | ||||||||||
| Twelve Months Ended | ||||||||||
| December 31, 2021 | December 31, 2020 | |||||||||
| Net (loss)/income | $ | (82,711 | ) | $ | 207,241 | |||||
| (Gains)/losses on asset dispositions and other asset impairment charges | (4,067 | ) | 97,490 | |||||||
| Depreciation, depletion, and amortization | 239,086 | 255,359 | ||||||||
| Pension and postretirement plan expense, net of contributions | 431,961 | 17,562 | ||||||||
| Changes in working capital | (107,444 | ) | 51,465 | |||||||
| Changes in tax accounts | (201,040 | ) | (11,972 | ) | ||||||
| Other operating activity | 22,887 | 88,476 | ||||||||
| Net cash provided by operating activities | 298,672 | 705,621 | ||||||||
| Purchase of property, plant and equipment, net | (242,853 | ) | (181,161 | ) | ||||||
| Proceeds from business disposition | 91,569 | 103,411 | ||||||||
| Cost of acquisitions, net of cash acquired | (22,209 | ) | (49,261 | ) | ||||||
| Net debt repayments | (107,077 | ) | (14,195 | ) | ||||||
| Cash dividends | (178,622 | ) | (172,626 | ) | ||||||
| Payments for share repurchases | (218,085 | ) | (8,483 | ) | ||||||
| Other, including effects of exchange rates on cash | (15,265 | ) | 36,259 | |||||||
| Net (decrease)/increase in cash and cash equivalents | (393,870 | ) | 419,565 | |||||||
| Cash and cash equivalents at beginning of period | $ | 564,848 | $ | 145,283 | ||||||
| Cash and cash equivalents at end of period | $ | 170,978 | $ | 564,848 | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||
| (Dollars in thousands) | |||||||
| December 31, 2021 | December 31, 2020 | ||||||
| Assets | |||||||
| Current Assets: | |||||||
| Cash and cash equivalents | $ | 170,978 | $ | 564,848 | |||
| Trade accounts receivable, net of allowances | 755,609 | 658,808 | |||||
| Other receivables | 95,943 | 103,636 | |||||
| Inventories | 562,114 | 450,691 | |||||
| Prepaid expenses and income taxes | 74,034 | 52,564 | |||||
| 1,658,678 | 1,830,547 | ||||||
| Property, plant and equipment, net | 1,297,500 | 1,244,110 | |||||
| Goodwill | 1,324,501 | 1,389,255 | |||||
| Other intangible assets, net | 278,143 | 321,934 | |||||
| Other assets | 514,414 | 491,413 | |||||
| $ | 5,073,235 | $ | 5,277,259 | ||||
| Liabilities and Shareholders’ Equity | |||||||
| Current Liabilities: | |||||||
| Payable to suppliers and other payables | $ | 1,102,662 | $ | 1,048,248 | |||
| Notes payable and current portion of long-term debt | 411,557 | 455,784 | |||||
| Income taxes payable | 11,544 | 7,415 | |||||
| 1,525,763 | 1,511,627 | ||||||
| Long-term debt, net of current portion | 1,199,106 | 1,244,440 | |||||
| Pension and other postretirement benefits | 158,265 | 171,518 | |||||
| Deferred income taxes and other | 340,561 | 439,146 | |||||
| Total equity | 1,849,540 | 1,910,528 | |||||
| $ | 5,073,235 | $ | 5,277,259 | ||||
Definition and Reconciliation of Non-GAAP Financial Measures
The Company’s results determined in accordance with U.S. generally accepted accounting principles (GAAP) are referred to as “as reported” or "GAAP" results. Some of the information presented in this press release reflects the Company’s “as reported” or "GAAP" results adjusted to exclude amounts related to restructuring initiatives, asset impairment charges, non-operating pension costs, environmental charges, acquisition/divestiture-related costs, gains and losses on dispositions of businesses, property insurance recoveries in excess of recorded losses, certain income tax related events and other items, if any, the exclusion of which management believes improves comparability and analysis of the ongoing operating performance of the business. These adjustments result in the non-GAAP financial measures referred to in this press release as “Base Earnings,” “Base Earnings per Diluted Share,” and "Base Provision for Income Taxes." In addition, as discussed above, starting in 2022 (including full-year and first quarter guidance for 2022) and going forward, the Company will also include adjustments in these non-GAAP financial measures to add back amounts relating to amortization-related expense on acquisition intangibles in order to better align such measures with those of its peers, better reflect the Company’s operating performance and increase the usefulness of such measures to the investing community.
These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Sonoco continues to provide all information required by GAAP, but it believes that evaluating its ongoing operating results may not be as useful if an investor or other user is limited to reviewing only GAAP financial measures. Sonoco uses these non-GAAP financial measures for internal planning and forecasting purposes, to evaluate its ongoing operations, and to evaluate the ultimate performance of each business unit against budget all the way up through the evaluation of the Chief Executive Officer’s performance by the Board of Directors. In addition, these same non-GAAP measures are used in determining incentive compensation for the entire management team and in providing earnings guidance to the investing community.
Sonoco management does not, nor does it suggest that investors should, consider these non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Sonoco presents these non-GAAP financial measures to provide users information to evaluate Sonoco’s operating results in a manner similar to how management evaluates business performance. Material limitations associated with the use of such measures are that they do not reflect all period costs included in operating expenses and may not reflect financial results that are comparable to financial results of other companies that present similar costs differently. Furthermore, the calculations of these non-GAAP measures are based on subjective determinations of management regarding the nature and classification of events and circumstances that the investor may find material and view differently.
To compensate for these limitations, management believes that it is useful in understanding and analyzing the results of the business to review both GAAP information which includes all of the items impacting financial results and the non-GAAP measures that exclude certain elements, as described above. Whenever Sonoco uses a non-GAAP financial measure, except with respect to guidance, it provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Whenever reviewing a non-GAAP financial measure, investors are encouraged to fully review and consider the related reconciliation as detailed below. First-quarter and full-year 2022 GAAP guidance are not provided in this release due to the likely occurrence of one or more of the following, the timing and magnitude of which we are unable to reliably forecast: possible gains or losses on the sale of businesses or other assets, restructuring costs and restructuring-related impairment charges, acquisition related costs, amortization expense on acquisition-related intangibles, and the income tax effects of these items and/or other income tax-related events. These items could have a significant impact on the Company's future GAAP financial results.
| Non-GAAP Adjustments | ||||||||||||||||||||
| Three Months Ended December 31, 2021 | GAAP | Restructuring / Asset Impairment Charges(1) | Acquisition Related Costs(2) | Other Adjustments(3) | Base | |||||||||||||||
| Operating profit | $ | 104,741 | $ | 5,321 | $ | 5,219 | $ | 9,377 | $ | 124,658 | ||||||||||
| Non-operating pension costs | 5,598 | — | — | (5,598 | ) | — | ||||||||||||||
| Interest expense, net | 12,491 | — | — | — | 12,491 | |||||||||||||||
| Income before income taxes | 86,652 | 5,321 | 5,219 | 14,975 | 112,167 | |||||||||||||||
| Provision for income taxes | 24,112 | 2,710 | 550 | (739 | ) | 26,633 | ||||||||||||||
| Income before equity in earnings of affiliates | 62,540 | 2,611 | 4,669 | 15,714 | 85,534 | |||||||||||||||
| Equity in earnings of affiliates, net of taxes | 5,140 | — | — | (1,394 | ) | 3,746 | ||||||||||||||
| Net income | 67,680 | 2,611 | 4,669 | 14,320 | 89,280 | |||||||||||||||
| Net (income) attributable to noncontrolling interests | (2,523 | ) | — | — | 2,052 | (471 | ) | |||||||||||||
| Net income attributable to Sonoco | $ | 65,157 | $ | 2,611 | $ | 4,669 | $ | 16,372 | $ | 88,809 | ||||||||||
| Per Diluted Share* | $ | 0.66 | $ | 0.03 | $ | 0.05 | $ | 0.17 | $ | 0.90 | ||||||||||
| * Due to rounding individual items may not sum across | ||||||||||||||||||||
| Non-GAAP Adjustments | ||||||||||||||||||||
| Three Months Ended December 31, 2020 | GAAP | Restructuring / Asset Impairment Charges(1) | Acquisition Related Costs(2) | Other Adjustments(4) | Base | |||||||||||||||
| Operating profit | $ | 17,230 | 85,947 | 3,613 | 19,190 | $ | 125,980 | |||||||||||||
| Non-operating pension costs | 7,510 | — | — | (7,510 | ) | — | ||||||||||||||
| Interest expense, net | 18,759 | — | — | — | 18,759 | |||||||||||||||
| (Loss)/Income before income taxes | (9,039 | ) | 85,947 | 3,613 | 26,700 | 107,221 | ||||||||||||||
| Provision for income taxes | 3,693 | 17,847 | 901 | 2,788 | 25,229 | |||||||||||||||
| (Loss)/Income before equity in earnings of affiliates | (12,732 | ) | 68,100 | 2,712 | 23,912 | 81,992 | ||||||||||||||
| Equity in earnings of affiliates, net of taxes | 1,449 | — | — | — | 1,449 | |||||||||||||||
| Net (loss)/income | (11,283 | ) | 68,100 | 2,712 | 23,912 | 83,441 | ||||||||||||||
| Net (income) attributable to noncontrolling interests | (359 | ) | (34 | ) | — | — | (393 | ) | ||||||||||||
| Net (loss)/income attributable to Sonoco | $ | (11,642 | ) | $ | 68,066 | $ | 2,712 | $ | 23,912 | $ | 83,048 | |||||||||
| Diluted weighted average common shares outstanding(5): | 100,948 | 395 | 101,343 | |||||||||||||||||
| Per Diluted Share* | $ | (0.12 | ) | $ | 0.67 | $ | 0.03 | $ | 0.24 | $ | 0.82 | |||||||||
| *Due to rounding individual items may not sum across | ||||||||||||||||||||
| (1) Restructuring/Asset impairment charges are a recurring item as Sonoco’s restructuring actions usually require several years to fully implement and the Company is continually seeking to take actions that could enhance its efficiency. Although recurring, these charges are subject to significant fluctuations from period to period due to the varying levels of restructuring activity and the inherent imprecision in the estimates used to recognize the impairment of assets and the wide variety of costs and taxes associated with severance and termination benefits in the countries in which the restructuring actions occur. Additionally, 2020 includes net asset impairment charges totaling | ||||||||||
| (2) Includes costs related to potential and actual acquisitions and divestitures. | ||||||||||
| (3) Includes non-operating pension expenses and other one-time charges. | ||||||||||
| (4) Includes the pre-tax loss on the divestiture of the Company's contract packaging business in Europe of | ||||||||||
| (5) Due to the magnitude of certain expenses considered by management to be non-base and included in Other Adjustments. the Company reported a quarter-to-date GAAP Net Loss Attributable to Sonoco. In instances where a company has a net loss, including potential common shares in the denominator of a diluted earnings per-share computation will have an antidilutive effect on the per-share loss. GAAP therefore requires the exclusion of any unexercised share awards or other like instruments for purposes of calculating weighted average shares outstanding. Accordingly, the Company did not include any unexercised share awards or other like instruments in calculating weighted average shares outstanding for GAAP purposes in the table above, which resulted in Basic Weighted Average Common Shares Outstanding and Diluted Weighted Average Common Shares Outstanding being the same. However, the Company also presents Base Net Income Attributable to Sonoco, which excludes the net non-base items. In order to maintain consistency and comparability of Base Diluted EPS, dilutive unexercised share awards were included in the calculation to the same extent they would have been had GAAP Net Income Attributable to Sonoco been equal to Base Net Income Attributable to Sonoco. | ||||||||||
| Non-GAAP Adjustments | |||||||||||||||||||||
| Twelve Months Ended December 31, 2021 | GAAP | Restructuring / Asset Impairment Charges(1) | Acquisition Related Costs(2) | Other Adjustments(3) | Base | ||||||||||||||||
| Operating profit | $ | 486,853 | $ | 14,210 | $ | 17,722 | $ | (3,420 | ) | $ | 515,365 | ||||||||||
| Non-operating pension costs | 568,416 | — | — | (568,416 | ) | — | |||||||||||||||
| Interest expense, net | 59,235 | — | — | 2,165 | 61,400 | ||||||||||||||||
| Loss from the early extinguishment of debt | 20,184 | — | — | (20,184 | ) | — | |||||||||||||||
| (Loss)/Income before income taxes | (160,982 | ) | 14,210 | 17,722 | 583,015 | 453,965 | |||||||||||||||
| (Benefit from)/Provision for income taxes | (67,430 | ) | 5,363 | 3,535 | 165,531 | 106,999 | |||||||||||||||
| (Loss)/Income before equity in earnings of affiliates | (93,552 | ) | 8,847 | 14,187 | 417,484 | 346,966 | |||||||||||||||
| Equity in earnings of affiliates, net of taxes | 10,841 | — | — | (1,394 | ) | 9,447 | |||||||||||||||
| Net (loss)/income | (82,711 | ) | 8,847 | 14,187 | 416,090 | 356,413 | |||||||||||||||
| Net (income) attributable to noncontrolling interests | (2,766 | ) | — | — | 2,052 | (714 | ) | ||||||||||||||
| Net (loss)/income attributable to Sonoco | $ | (85,477 | ) | $ | 8,847 | $ | 14,187 | $ | 418,142 | $ | 355,699 | ||||||||||
| Diluted weighted average common shares outstanding(4): | 99,608 | 469 | 100,077 | ||||||||||||||||||
| Per Diluted Share* | $ | (0.86 | ) | $ | 0.09 | $ | 0.14 | $ | 4.18 | $ | 3.55 | ||||||||||
| *Due to rounding individual items may not sum across | |||||||||||||||||||||
| Non-GAAP Adjustments | ||||||||||||||||||
| Twelve Months Ended December 31, 2020 | GAAP | Restructuring / Asset Impairment Charges(1) | Acquisition Related Costs(2) | Other Adjustments(5) | Base | |||||||||||||
| Operating profit | $ | 357,804 | 145,580 | 4,671 | 18,934 | $ | 526,989 | |||||||||||
| Non-operating pension costs | 30,142 | (30,142 | ) | — | ||||||||||||||
| Interest expense, net | 72,070 | — | — | — | 72,070 | |||||||||||||
| Income before income taxes | 255,592 | 145,580 | 4,671 | 49,076 | 454,919 | |||||||||||||
| Provision for income taxes | 53,030 | 32,868 | 1,236 | 27,126 | 114,260 | |||||||||||||
| Income before equity in earnings of affiliates | 202,562 | 112,712 | 3,435 | 21,950 | 340,659 | |||||||||||||
| Equity in earnings of affiliates, net of taxes | 4,679 | — | — | — | 4,679 | |||||||||||||
| Net income | 207,241 | 112,712 | 3,435 | 21,950 | 345,338 | |||||||||||||
| Net loss attributable to noncontrolling interests | 222 | (60 | ) | — | — | 162 | ||||||||||||
| Net income attributable to Sonoco | $ | 207,463 | $ | 112,652 | $ | 3,435 | $ | 21,950 | $ | 345,500 | ||||||||
| Per Diluted Share* | $ | 2.05 | $ | 1.11 | $ | 0.03 | $ | 0.22 | $ | 3.41 | ||||||||
| *Due to rounding individual items may not sum across | ||||||||||||||||||
| (1) Restructuring/Asset impairment charges are a recurring item as Sonoco’s restructuring actions usually require several years to fully implement and the Company is continually seeking to take actions that could enhance its efficiency. Although recurring, these charges are subject to significant fluctuations from period to period due to the varying levels of restructuring activity and the inherent imprecision in the estimates used to recognize the impairment of assets and the wide variety of costs and taxes associated with severance and termination benefits in the countries in which the restructuring actions occur. Additionally, 2020 includes net asset impairment charges totaling | ||||||||||||||||||
| (2) Includes costs related to potential and actual acquisitions and divestitures. | ||||||||||||||||||
| (3) Includes non-operating pension expenses related to after-tax pension settlement charges of | ||||||||||||||||||
| (4) Due to the magnitude of certain expenses considered by management to be non-base and included in Other Adjustments. the Company reported a year-to-date GAAP Net Loss Attributable to Sonoco. In instances where a company has a net loss, including potential common shares in the denominator of a diluted earnings per-share computation will have an antidilutive effect on the per-share loss. GAAP therefore requires the exclusion of any unexercised share awards or other like instruments for purposes of calculating weighted average shares outstanding. Accordingly, the Company did not include any unexercised share awards or other like instruments in calculating weighted average shares outstanding for GAAP purposes in the table above, which resulted in Basic Weighted Average Common Shares Outstanding and Diluted Weighted Average Common Shares Outstanding being the same. However, the Company also presents Base Net Income Attributable to Sonoco, which excludes the net non-base items. In order to maintain consistency and comparability of Base Diluted EPS, dilutive unexercised share awards were included in the calculation to the same extent they would have been had GAAP Net Income Attributable to Sonoco been equal to Base Net Income Attributable to Sonoco. | ||||||||||||||||||
| (5) Includes the pre-tax loss on the divestiture of the Company's contract packaging business in Europe of | ||||||||||||||||||
| Twelve Months Ended | ||||||||||
| Actual | Actual | |||||||||
| FREE CASH FLOW* | December 31, 2021 | December 31, 2020 | ||||||||
| Net cash provided by operating activities | $ | 298,672 | $ | 705,621 | ||||||
| Purchase of property, plant and equipment, net | (242,853 | ) | (181,161 | ) | ||||||
| Free Cash Flow | $ | 55,819 | $ | 524,460 | ||||||
| Twelve Months Ended | ||||||||||
| Estimated Low End | Estimated High End | |||||||||
| FREE CASH FLOW* | December 31, 2022 | December 31, 2022 | ||||||||
| Net cash provided by operating activities | $ | 690,000 | $ | 740,000 | ||||||
| Purchase of property, plant and equipment | (325,000 | ) | (325,000 | ) | ||||||
| Free Cash Flow | $ | 365,000 | $ | 415,000 | ||||||
| * Free Cash Flow is a non-GAAP measure that does not imply the amount of residual cash flow available for discretionary expenditures, as it excludes mandatory debt service requirements and other non-discretionary expenditures. Beginning in 2021, the Company defined Free Cash Flow as cash from operating activities less purchases of property, plant, and equipment, net. Purchase of property, plant, and equipment, net are defined as purchases of property, plant, and equipment minus proceeds from, and/or plus costs incurred in, the disposition of capital assets. | ||||||||||
FAQ
What were Sonoco's fourth-quarter 2021 earnings per diluted share?
How did Sonoco's net sales for 2021 compare to 2020?
What is the expected impact of the Ball Metalpack acquisition on Sonoco's earnings?
What was Sonoco's full-year 2021 GAAP loss?
What is the projected cash flow for Sonoco in 2022?
